The Great Waves Of History

How price movements precede world-changing events

Hello there,

We’re living in an era where many of our assumptions have been shattered.

We thought that peace had triumphed and that wars were behind us- only to be punched in the throat by the breakout of war in Ukraine and the Middle East.

We thought the 21st Century would be a time of rising prosperity and happiness, but then the economic crashes of 2008 and 2020 kicked us in the gonads.

All our assumptions about the world keep getting shattered- and that’s because we don’t study the past enough.

But if we do, there are a lot of patterns we can observe. Most of them will turn out to be dogshit, but hey, it’s at least fun to try and study what the past may be telling us about the future.

While doing this kind of research, I came across a book that has identified a recurring pattern in history that I found particularly interesting.

For the last few years, I’ve been cautiously watching inflation levels and noticing how everything just keeps getting more and more expensive. We might soon need 10-year loans just to buy a pair of diapers.

[Of course, I’m exaggerating. Diapers aren’t going to become that affordable]

In trying to understand what the heck was happening, I turned to David Hackett Fisher’s book “The Great Wave”, and the idea that he proposes is simple…and terrifying.

Great Waves & Crashes

In his research, DHF tried to study the prices of grains, land, manufactured goods, etc to see if he could observe any patterns between price levels over time and the state of the world. This study was more focused on the Western world to be fair, but the conclusion was striking.

Put simply, it was observed that at various periods in history, the price of food started rising and culminated in disaster.

This trend has been observed over and over again, and here are the key “price waves” that shook the world: phases where prices kept going up and ultimately culminated with a major reckoning in the form of famine, war, disease, and widespread collapse:

• 1200-1320 AD: This era ended with the Black Death, where food prices were unaffordable, people resorted to cannibalism, and the plague wiped out a big chunk of Europe. Wars broke out, famine surged, and it was one of the blackest periods in European history.

• 1470-1650 AD: After an era of relative peace and prosperity in the interim, once again prices started surging creating widespread hardship, and this culminated in the disastrous 30 Years War, which ended with the Treaty of Westphalia and the birth of nation-states.

• 1730-1820 AD: Another period of stability (the Renaissance period where the arts and scientific thinking flourished), gave way to rising prices, instability, and the great price wave crashed with the French Revolution and the Napoleonic Wars that gutted Europe.

• 1910-Now: The 4th price wave began right before WW1, saw 2 disastrous world wars, and oil shocks, and hasn’t culminated yet. If history rhymes, we’re probably in the late stage of another price revolution where things start getting nasty.

  
  

The Nature Of Great Waves

You may be worried reading this but don’t stress, because as Keynes said “In the long run, we’re all dead”. Might as well enjoy life while it’s going well.

Now, we can see from the above chart that there’s a pattern to these great waves where rising prices culminate in some sort of Judgement Day. But why do these price surges happen?

Well, per DHF, there have been many proposed reasons but they’re different for each cycle.

The first 2 waves were caused by booming populations in the stable periods that preceded the waves. In times of peace and stability, people decide to marry early and have more kids because they see the world as a good place to raise their kids. As the population rises, it puts greater stress on resources, and since humans didn’t have the tech to ramp up production, it causes prices to rise.

Once the price movements begin, states often try to fix things by debasing the currency (i.e. printing money), but instead of improving things it always leaves everyone worse off as the value of their money drops and they can buy fewer things with the same salaries.

The last 2 waves were triggered not just by rising pops but also by the improvement of living standards, which put greater stress on resources.

Another interesting pattern to note is that along with rising prices, average wages stagnate (so people’s purchasing power keeps dropping over time), and inequality worsens. At the same time, rents and land prices keep going up- so the rich continue to get richer while the poor get poorer.

In the 1st wave, the poor were so short of food that they got weak and perished. But as living standards improved and world markets developed, starvation turned into hunger as fewer people simply dropped dead like in the past.

But the politics of hunger are different. The starving may just die off, but the hungry become angry- which paved the way for the French Revolution in 1789 (and ultimately marked the final stage of the 3rd Wave).

When this trend continues to accelerate, it might just be a predictor of coming instability, as the 4 waves have shown repeatedly. What I worry about is that we’re seeing the acceleration of this trend today across the world, with inequality reaching nosebleed levels.

In India, if we’re not able to ensure that the youth get jobs and that the next generation is better off than their parents, we may be heading for some sort of crisis (again, I don’t claim to hold a crystal ball. I’m simply looking at the patterns from the past).

The 5th wave is not over yet. Maybe we might find some tech or productivity miracle and avoid it fully. Or perhaps the reckless money printing may leave us teetering at the brink of another collapse in the coming decades.

Some Other Characteristics

There are a few more features of these waves that I found interesting.

It has been observed that rates of crimes, theft, and drug and alcohol use also start peaking as the waves surge, and come crashing down when we enter periods of equilibrium (like the Enlightenment or Victorian eras).

Even the levels of family disruption, as measured by the number of births happening outside marriages, go on rising as these waves progress.

My interpretation is that as prices rise, purchasing power drops, and life gets harder, people resort to all sorts of mischief to cope with the hard times- be it resorting to drugs or drink, or stealing to be able to get by.

Additionally, after every wave, the bloodiness and suffering that came at the climax was a bit reduced as our technology and institutions kept getting better. Thanks to charity and aid organizations, people fared much better each time there was a nasty event that shook their countries.

So even if we may be heading for a day of reckoning, I hope that since we live in a much better world with improving tech, better living conditions, and the ever-expanding arc of morality that may reduce our suffering.

And every crash is followed by a reset, where prices stabilize, purchasing power improves, and people live better lives than before.

While the rhythm of history may hint at a period of tumult, let me end with an uplifting (and hilarious) story.

Reverend Samuel Miller predicted that the world would end on 31st Dec, 1843. But as the date approached and everything seemed to be fine & dandy, he flipped at the last minute, saying that there were some errors in his calculations.

Now the revised date was 21st March 1844 (thank goodness he discovered the error in his Python program). But as he changed his date, his followers kept rising and more and more people paid attention to him (who doesn’t love some doomsday porn?). These followers were so involved that everything came to a standstill on a fated day in some parts of New England.

But nothing happened. He was wrong again, but that didn’t deter his followers. The dude continued to make his “predictions” (and revise them) till he suddenly passed away in 1849, brining an end to his wrong prophesying.

The point of the story is that predicting the end of the world is good business, and we humans can’t get enough of that crap. So it's kinda pointless to give in to those scare stories, because millions of them have been told before, and you wouldn’t be reading my stupid newsletter if any of them were true.

Instead of being depressed, be vigilant. Learn how the world works, and what history has been telling us. Harbor an open mind- for in times of crisis, the ones who can adapt have the highest chance of surviving.

And while you nerd out, don’t forget to enjoy life. It’s a miracle we’ve all come so far.

Don’t waste it.

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